The ASX could surge today after US benchmarks did the same leading into the weekend.
ASX Futures (SPI 200) imply the ASX 200 will open 95 points higher, up 1.42%.
Wall St rallied on hopes that the Federal Reserve could start to slow the pace of tightening after the November meeting.
In support of this, the Wall Street Journal reported expectations of one final 75 bp hike in November followed by smaller increases.
All 11 sectors in the US were in the green, with Materials leading the way as optimism surrounding China’s COVID restrictions grew.
Pfizer (NYSE:PFE) surged 4.8% as it threatened to quadruple its COVID vaccine prices. However, Twitter tanked 4.9% after Tesla (NASDAQ:TSLA) CEO Elon Musk hinted he would slash three-quarters of the Twitter workforce after he takes over the company.
Snap was a huge loser. It lost 28.1% after missing revenue estimates and posting its slowest growth since listing in 2017.
"We are finding that our advertising partners across many industries are decreasing their marketing budgets, especially in the face of operating environment headwinds, inflation-driven cost pressures and rising costs of capital," Snap stated.
The S&P 500 rose 2.37%. The Dow Jones was 2.47% higher and the NASDAQ gained 2.31%.
Here’s what we saw:
Iron ore futures rose 0.1% to US$94.5 a tonne, but prices fell -1.4% last week.
"High energy prices, rising interest rates and falling confidence have led to a slowing in steel-using sectors' activities," said World Steel Economics Committee chairman Máximo Vedoya.
The World Steel Association forecasts steel demand to fall 2.3% year-on-year to 1.8 billion tonnes in 2022 and rise just 1.0% in 2023.
As for oil, Oanda senior market analyst, Ed Moya said: “The oil market is still looking tight and that should support crude prices staying above the $80 level. As the war in Ukraine persists, it looks like we might see escalating sanctions on not just Russia but also Iran.”
- Gold rallied. 1.57% to US$1.662.50.
- Zinc rose 1.7% to US$347.8 a tonne.
- Natural gas lost 4.5% to US$5.4/MMboe.
- WTI Oil was 0.75% higher to US$85.14.
Aviva (LON:AV) Investors head of Investment Strategy and chief economist Michael Grady has shared the key themes and risks that Aviva expects to drive China’s financial markets this quarter.
“China’s economy is at a weak point as Xi’s second term draws to a close, with policy errors destroying the promises of ‘stability’ and the 5.5% growth target missed for the second time in three years. While our base case is that the damage is difficult to reverse, there are several ‘known unknowns’ that also point to potential upside risks.
“The first and arguably most important is Zero-COVID Policy (ZCP) which has been modified but is still exerting a severe negative influence through 2022, as lockdowns move from city to city and sharply curtail activity.
"After admitting in May that the economic situation was ‘worse than in 2020’, Premier Li Keqiang rolled out policies that were touted as 'more forceful' than two years ago – but the dampened confidence caused by lockdowns means many transmission mechanisms are broken.
“If China exits ZCP, even in a bumpy fashion with some health issues and reversals, it could unleash some pent-up demand and vastly improve confidence, though the rebound will not be as big as after Western economies reopened from extremely depressed levels.
“Another huge benefit of reopening will be tourism, both for China’s domestic hospitality sector, but also the rest of the world, which will again have millions of visitors spending money at restaurants and hotels, losing money at casinos and buying various entertainment services.
“A second possible upside is that the effort to stabilise the property sector works better than in other real estate busts, in the UK and US for example, where 200-30% declines in house price indices and collapses in housing starts were followed by L-shaped recoveries that took 5-6 years to regain an upward trajectory.
"China is helped thus far by GDP that is still growing, prices that haven’t collapsed, a smaller supply overhang, and well-capitalised banks that have avoided a crisis despite widespread developer distress.
“Finally, the political cycle is perhaps underestimated but has probably acted as a constraint on SOEs and local governments, which are afraid of mistakes and corruption probes ahead of possibilities for career advancement.
"Following October’s Party Conference and the March 2023 implementation at the National People’s Congress, more aggressive investment projects may be deployed, and if this happens (a big if) the private sector may also see a more pro-business stance by the ruling party, after years of harsh new rules and insecurity.”